Page 408 - SBR Integrated Workbook STUDENT S18-J19

Chapter 25

Chapter 5

Example 1

PPE

The building would have been initially recognised at its cost of $50 million.

Depreciation of $1 million ($50m/50 years) per year would have been charged
to profit or loss in the year ended 31 December 20X1 and the year ended 31
December 20X2.

At 31 December 20X2, the building had a carrying amount of $48 million
(48/50 × $50m) prior to the revaluation. A revaluation gain of $5 million ($53m
– $48m) would have been recorded in other comprehensive income for the
year ended 31 December 20X2.

In the year ended 31 December 20X3, depreciation of $1.1 million ($53/48
years) would have been charged to the statement of profit or loss.

The carrying amount of the building prior to the revaluation would have been
$51.9 million ($53m – $1.1m). A revaluation loss of $7.9 million ($51.9 –
$44m) arises in the year ended 31 December 20X3. Of this, $5 million (the
balance on the revaluation reserve) would be charged to other comprehensive
income and the remaining $2.9 million would be charged to profit or loss.

Example 2

Government grants

The machine is initially recorded at $9 million ($10m – $1m).

Depreciation of $0.9 million ($9m/5 years × 6/12) is charged in the year ended
31 December 20X1. The machine has a carrying amount of $8.1 million ($9m
– $0.9m) as at 31 December 20X1.

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